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Exercise 15-7 (30 minutes)
1.
Cost of direct materials used
Beginning raw materials inventory...................................................
$ 43,000
Plus purchases ...................................................................................
210,000
Raw materials available ................................................................
253,000
Less ending raw materials inventory ...............................................
(52,000)
Total raw materials used ................................................................
201,000
Less indirect materials used .............................................................
(15,000)
Cost of direct materials used ............................................................
$ 186,000
Beg. balance 43,000
Purchases 210,000
Available for use 253,000
Direct materials 186,000
Indirect materials 15,000
Ending balance 52,000
Raw Materials Inventory
2.
Cost of direct labor used
Total factory payroll ................................................................
$ 345,000
Less indirect labor ................................................................
(80,000)
Cost of direct labor used ................................................................
$ 265,000
3.
Cost of goods manufactured
Beginning work in process inventory ..............................................
$ 10,200
Plus direct materials ................................................................
186,000
Plus direct labor .................................................................................
265,000
Plus overhead applied (70% of direct labor cost) ..............................
185,500
Total cost of work in process ............................................................
646,700
Less ending work in process inventory ................................
(21,300)
Cost of goods manufactured ............................................................
$ 625,400
Beg. balance 10,200
Direct materials 186,000
Work in Process Inventory
Exercise 15-7 (continued)
4.
Cost of goods sold
Beginning finished goods inventory ................................................
$ 63,000
Plus cost of goods manufactured ....................................................
625,400
Less ending finished goods inventory................................
(35,600)
Cost of goods sold ................................................................
$ 652,800
Beg. balance 63,000
COGM 625,400
Available for sale 688,400
Cost of goods sold 652,800
Ending balance 35,600
Finished Goods Inventory
5.
Gross profit
Sales ................................................................................................
$1,400,000
Cost of goods sold ................................................................
(652,800)
Gross profit .........................................................................................
$ 747,200
6.
Actual overhead incurred
Indirect materials ................................................................................
$ 15,000
Indirect labor .......................................................................................
80,000
Other overhead costs ................................................................
120,000
Total actual overhead incurred .........................................................
215,000
Overhead applied ...............................................................................
185,500
Underapplied overhead ................................................................
$ 29,500
Indirect materials 15,000
Indirect labor 80,000
Other overhead 120,000
Total actual OH 215,000
OH applied 185,500
Underapplied OH 29,500
Factory Overhead
Exercise 15-8 (10 minutes)
1.
Raw Materials Inventory ................................
210,000
Cash ................................................................
210,000
To record materials purchases.
2.
Work in Process Inventory ................................
186,000
Raw Materials Inventory ................................
186,000
To assign direct materials to jobs.
3.
Factory Overhead ...........................................................
15,000
Raw Materials Inventory ................................
15,000
To record indirect materials used.
Exercise 15-9 (10 minutes)
1.
Work in Process Inventory ................................
265,000
Factory Payroll Payable ................................
265,000
To record direct labor used.
2.
Factory Overhead ...........................................................
80,000
Factory Payroll Payable ................................
80,000
To record indirect labor used.
3.
Factory Payroll Payable ................................
345,000
Cash ................................................................
345,000
To record payment of payroll.
Exercise 15-10 (10 minutes)
1.
Factory Overhead ...........................................................
120,000
Other Accounts ........................................................
120,000
To record other factory overhead.
2.
Work in Process Inventory ................................
185,500
Factory Overhead .....................................................
185,500
To apply overhead to jobs.
Computed as: 70% Predetermined overhead rate x
direct labor of $265,000
Exercise 15-11 (10 minutes)
Actual OH 215,000 OH applied 185,500
Underapplied 29,500
Factory Overhead
Exercise 15-13 (25 minutes)
a.
Raw Materials Inventory ................................................
90,000
Accounts Payable ....................................................
90,000
To record materials purchases.
b.
Work in Process Inventory ............................................
36,500
Raw Materials Inventory ..........................................
36,500
To assign costs of direct materials used.
Factory Overhead...........................................................
19,200
Raw Materials Inventory ..........................................
19,200
To record indirect materials.
c.
Work in Process Inventory ............................................
38,000
Factory Overhead..........................................................
Cash ..........................................................................
12,000
50,000
To record payroll costs paid.
d.
Factory Overhead...........................................................
11,475
Cash ..........................................................................
11,475
To record other factory overhead paid.
e.
Work in Process Inventory ............................................
47,500
Factory Overhead.....................................................
47,500
To apply overhead to jobs at the rate of 125% of
direct labor cost.
f.
Finished Goods Inventory .............................................
56,800
Work in Process Inventory ................................
56,800
To record jobs completed.
g.
Cost of Goods Sold ........................................................
56,800
Finished Goods Inventory ................................
56,800
To record cost of sale of job.
Accounts Receivable .....................................................
82,000
Sales ..........................................................................
82,000
To record sale of job.
Exercise 15-14 (35 minutes)
1.
Predetermined overhead rate
Estimated overhead costs ..............................................................
$750,000
Estimated direct labor costs ...........................................................
$625,000
Rate (Overhead/Direct labor) ..........................................................
120%
2. & 3.
Factory Overhead
Incurred ........................
830,000
Applied* ................................
822,000
Underapplied ................
8,000
*Overhead applied to jobs = 120% x $685,000 = $822,000
4.
Dec. 31
Cost of Goods Sold ........................................................
8,000
Factory Overhead .....................................................
8,000
To close underapplied overhead.
Exercise 15-15 (25 minutes)
1.
Predetermined overhead rate
Estimated overhead costs .............................................................
$1,680,000
Estimated direct labor costs .........................................................
$ 480,000
Rate ($1,680,000/$480,000) ............................................................
350%
2. & 3.
Overhead
Incurred .........................
1,652,000
Applied* ................................
1,662,500
Overapplied ................................
10,500
*Overhead applied to jobs = 350% x $475,000 = $1,662,500
4.
Dec. 31
Factory Overhead ...........................................................
10,500
Cost of Goods Sold ..................................................
10,500
To close overapplied overhead.
Exercise 15-16 (30 minutes)
1. Overhead rate = Total overhead costs / Total direct labor costs
2.
Total cost of work in process inventory ................................
$ 71,000
Deduct: Direct labor ................................................................
(20,000)
Deduct: Factory overhead ($20,000 x 60%) ...........................
(12,000)
Direct materials ........................................................................
$ 39,000
3.
Total cost of finished goods inventory .................................
$490,000
Deduct: Direct materials ........................................................
(250,000)
Direct labor and factory overhead costs ...............................
$240,000
We also know that the total of direct labor costs (X) and factory
overhead costs (0.6X) equals $240,000. Thus, to get the individual
amounts we need to solve: [X + 0.6X = $240,000]. The solution is:
Direct labor costs = $150,000
Factory overhead costs = $150,000 x 0.6 = $90,000
Exercise 15-17 (20 minutes)
1.
a.
Work in Process Inventory ............................................
9,500
Raw Materials Inventory ..........................................
9,500
To record direct materials used.
b.
Work in Process Inventory ............................................
8,000
Factory Payroll Payable...........................................
8,000
To record direct labor used.
c.
Work in Process Inventory ............................................
6,400
Factory Overhead.....................................................
6,400
To apply overhead at 80% of direct labor cost.
d.
Cost of Goods Sold* ......................................................
16,000
Finished Goods Inventory ................................
16,000
To record cost of sale of job 120.
e.
Accounts Receivable .....................................................
22,000
Sales ..........................................................................
22,000
To record sale of job 120.
*Total of direct materials, direct labor, and overhead applied to this job in June ($11,040)
and July ($4,960).
2. The balance in Work in Process Inventory at the end of July ($6,280)
equals the total cost reported on the job cost sheet for Job 122, the
only job still in process at the end of the month. The balance in
Exercise 15-18 (35 minutes)
1. Estimated cost of the architectural job
Labor type
Estimated
hours
Hourly rate
Total cost
Architects ................................
150
$300
$ 45,000
Staff ................................
300
75
22,500
Clerical ................................
500
20
10,000
Total labor cost .........................................................................
77,500
Overhead applied 175% of direct labor cost .........................
135,625
Total estimated cost................................................................
$213,125
2. Frey should first determine an estimated selling price, based on its cost
and desired profit for this job.
Total estimated cost ................................................................
$213,125
Desired profit ............................................................................
80,000
Estimated selling price ............................................................
$293,125
Exercise 15-19 (15 minutes)
(1)
Raw Materials Inventory ...............................................
3,108
Accounts Payable ....................................................
3,108
To record raw material purchases.
Work in Process Inventory* ..........................................
3,106
Raw Materials Inventory .........................................
3,106
To record raw materials used in production.
* The amount of raw materials used in production is computed from the Raw Materials
Inventory account. Beginning balance plus purchases minus ending balance equals
raw materials used in production, or (in millions), €83 + €3,108 - €85 = €3,106.
(2) The amount of materials purchased is almost equal to the amount of
